WHY BEING SECOND IS OFTEN BETTER THAN BEING FIRST

When I was first hired at Boardroom in 1995, I was given the title of Director of Alternate Media … and alternate media was defined as everything and anything except direct mail.

That meant that I was responsible for exploring any direct response medium besides direct mail that potentially could bring in new customers, including but not limited to newspaper and magazine ads, package inserts, statement stuffers, TV, radio, and this new medium called the Internet.

It was a lot of fun, as we did a lot of testing. Not everything worked. However, we had a couple of big successes, as we were able to scale the package insert and statement stuffer business to very large quantities.

I have a problem, though. And that is that I never met a direct response medium that I didn’t like … and I would most often be willing to test virtually any new direct response vehicle that was presented to me. 

Unfortunately, that can get you into some trouble if you are not careful.

One of the more interesting opportunities that we tested at the time was the back of ATM receipts.

Yes, you read that right.

One of our brokers said that we could promote our product on the back of ATM receipts, at an extremely low CPM. It was a brand new program. And I was really excited about breaking new ground in a direct response medium that had not been used before by anyone … because if it did pay out, I knew that there were a gazillion ATM receipts that are printed and distributed to bank customers each day.

I was already counting the new subscribers we could yield from this source!

Well, we booked a test for 200,000 ATM receipts, split between three different regions. I carefully prepared the creative and the offer. And sent it off to the broker. And waited a couple of weeks until the promotion finally hit.

The 200,000 ATM receipts were distributed to bank customers in three days. I couldn’t wait to start reading the reports about the orders that I knew would be coming … we didn’t need a lot of orders to make money.

Unfortunately, after several weeks, we received one order. (By the way, it’s worse to get one order than zero orders, because if you get zero orders, you can always claim that the promotion didn’t run!) And my bubble had completely burst.

Just to be clear, we didn’t spend a lot of money on this test. But it did teach me an important lesson. You don’t always have to be first in an untested medium. In fact, it’s almost always better to be second—after you have seen someone else have success—than to be first. That way, someone else spends the money to find out if a medium is successful, and you have a better chance of making a test work and scaling up than if you were the first person to test the medium.

I can think of a couple of instances where I have applied this important lesson. 

Whenever I test new mailing lists, I’ll always ask if someone else has tested and continued on that list. If they have, then I have more confidence that this particular list will work for me than if I were blindly testing the list without that knowledge –and I likely will test it. It greatly improves the odds of success.

The second example is when Boardroom entered the infomercial business in 2005. There was a guy named Kevin Trudeau who was all over the airwaves selling a book called Natural Cures. We watched the infomercial … and bought the book. And we realized that we had a much better health book with natural cures of our own, and we were savvier with our marketing. We surmised that if Trudeau could successfully sell a $30 health book on TV, we could probably have some success as well.

Five years and $150 million in profitable sales later, I think we proved we were right. Lesson: It was fine to be second, as there was plenty of money left on the table for us to profitably gain from this source—without having a big risk of testing an unproven market.

By employing this strategy, you may not get the satisfaction of being the first to do something, but the good news is that you’ll be saving yourself a lot of money on testing new products and new media that ultimately might fail.

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Michael Feldstein is the owner of MGF Marketing, a direct marketing consulting firm. He can be reached at [email protected]